Regulatory Alerts2023-07-31
FMI Standard 7: Liquidity Risk
The Reserve Bank of New Zealand and the Financial Markets Authority jointly issued FMI Standard 7 to mandate that designated financial market infrastructure operators measure, monitor, and manage liquidity risk. The standard requires operators to maintain sufficient qualifying liquid resources to ensure same-day and intraday settlement under a wide range of stress scenarios, including participant defaults. Operators must also conduct rigorous annual stress testing, establish robust liquidity provider due diligence, and implement explicit procedures to handle settlement following defaults without delaying obligations.
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